UK house prices defied wider economic uncertainty in June, rising 0.3% month-on-month, according to data from Halifax. The increase brought the average property price to £292,500, with annual growth reaching 1.6%.
Halifax Reports Modest Growth Amidst Stagnation
The Halifax House Price Index showed that prices edged up in June, following a 0.2% rise in May. However, the pace of annual growth slowed from 1.8% in May, indicating a cooling market. Amanda Bryden, head of mortgages at Halifax, noted that the market is showing resilience despite economic headwinds.
"The housing market continues to demonstrate stability, with prices rising modestly in June," Bryden said. "While broader economic uncertainty persists, low unemployment and wage growth are supporting demand."
Regional Variations Across the UK
Northern Ireland recorded the strongest annual growth at 3.2%, with an average price of £195,000. In contrast, London saw the weakest growth, with prices rising just 0.5% year-on-year, to an average of £530,000. The South East also lagged, with annual growth of 0.8%.
Wales and Scotland posted annual increases of 2.1% and 1.9%, respectively, while the East Midlands saw a 1.4% rise. The North West outperformed the UK average with 2.3% annual growth.
Interest Rates and Affordability Constraints
The Bank of England's base rate remains at 5.25%, the highest in 16 years, keeping mortgage costs elevated. This has constrained buyer affordability, particularly for first-time buyers. Halifax data indicates that the average mortgage rate for a two-year fixed deal is now 5.8%, down from 6.1% in January but still significantly higher than the historic lows of recent years.
Bryden added: "Affordability remains a challenge, but the market is adjusting. We expect prices to remain broadly flat over the coming months."
Outlook for the Housing Market
Economists predict that the housing market will remain subdued in the second half of 2024, with prices fluctuating within a narrow range. The upcoming general election and potential fiscal changes could also impact buyer sentiment. However, Halifax expects annual growth to stay positive, albeit below 2%.
Sarah Coles, head of personal finance at Hargreaves Lansdown, commented: "The June data suggests the market is holding its breath. Sellers are still pricing realistically, but buyers are cautious. The real test will come in the autumn."
Overall, the June figures provide a mixed picture: resilience in the face of economic uncertainty, but with clear signs that high borrowing costs are capping price growth.
